The Profit and Loss (P&L) statement, also called an income statement, is one of the most important financial statements of a company alongside the Balance Sheet, the Cash Flow Statement, and other important documents.
The Profit and Loss statement records the revenue accrued and expenses incurred by a company in a specific period, usually a quarter or a year. It helps provide insight into the net profit earned or net loss suffered by the company.
Investors often review this statement along with the balance sheet and cash flow statement to judge a company’s financial health and profitability.
They do this by comparing present statements with past ones to see the trajectory or growth potential of the business. A business can improve its financial performance by reducing costs, increasing revenue, or both.
